Earn Money. Spend Money. Save and Invest Money.

Money can be a complicated thing, but many times we just over complicate it. If you want to be successful with money, it’s really comes down to just 3 things. The three things are how much money you earn, how much money you spend, and how much money you save and invest.

If you pay attention to those three “money metrics”, you’ll do just fine. The problem is that most of us don’t pay attention to any of those metrics, and that’s why most of America is broke. It’s also why so many people end up relying on social security.

Even successful career people don’t pay attention to these metrics, and consequently, they end up squandering years of wealth building opportunity. What do I mean? Well, for most of us college graduates, we enjoy seeing our incomes grow substantially from the time we graduate college through the first 20 years of our careers. However, as our incomes grow, so do our spending habits. We raise our expenses to match our income, and there goes our wealth. Bye bye millionaire potential.

I was on that path when I got out of college. I made $39,000 on my first professional job out of college, but somehow I ended up $16,000 in debt. What?! How the hell did that happen? Fortunately, that was my wake up call, and I made some drastic changes. For starters, I got money smart. I learned everything I could about money because obviously I didn’t know jack. I read Kiplinger’s magazine. I read Smart Money magazine, and a host of other things I can’t recall. That was 20 years ago. It changed me. It transformed my financial future. After I got money smart, I decided I wanted to be a millionaire. I was 26 and decided to become a millionaire by the time I was 40. I made it.

The funny thing about goals and plans. They often don’t work out exactly as you plan, but many times you still hit your goal. I hit my goal, but my path was a little different than I planned. That’s okay. For anyone wanting to become a millionaire, the place where we start is often the same. Get money smart. Then pay attention to how much money you earn, how much money you spend, and how much money you save and invest.

These were all keys elements to my millionaire plan when I was 26, and they’re still part of what I teach today. For anyone who aspires to be a millionaire, they apply to you too.

  1. Pay attention to how much money you earn. Always work on ways to increase how much you earn. If you’re stuck in a job that limits how much you can make, you need to look for other ways to make money, and that may include finding a new job. Don’t let yourself get stuck at an income plateau. If you make $50,000 a year, set a goal and look for ways to boost that to $100,000 a year. If you make over a $100,000 a year, set a goal and look for ways to boost that to $200,000 a year. You can do it. Almost anyone can do it.

    Early in my career my goal was to make more, but work less. I started out working 60+ hours a week and making $39,000 a year. I was able to lower my hours down to 45 a week an raise my income to $47,500, but I was stuck at an income plateau. Shortly after that, I changed jobs and saw my income soar into six figures plus. I’m sure glad I made that change. It was a key piece of the puzzle on my millionaire journey.

    My world was rocked recently when I met a new friend. I was about 36 or 37 by the time I had earned $1 million as an adult. It took me about 10 years to earn my first million dollars. Then recently I met a new friend. He rocked my paradigm. He was 22 without a college education when he earned his first $1 million. Ouch. He beat me by at least 14 years.

    Are you “income stuck?” Change it. Get unstuck. Do it today.

  2. Pay attention to how much money you spend. Don’t let your spending habits kill your ability to build wealth. Big ticket items like buying new cars on debt can cost you hundreds of thousands of dollars in future wealth. But bad daily spending habits like eating out can cost you just as much if not more. Take a look at your spending habits and learn to make better decisions. Keep your lifestyle under control until you’ve built your wealth, then you can really enjoy a more relaxed and cushy lifestyle. It’s worth it.

    If you’re not doing a spending plan, do one. Spending plans and budgets are a pain, but the results are worth it. If you’re not the type of person to run a tight budget, then do a “spending audit” and make adjustments. I guarantee you’ll find money (and your future wealth) slipping through your fingers. Do an audit. Find the problems. Make a adjustments. Every wasted dollar you find can help you build future wealth and help you with your millionaire goal.

  3. Be aggressive with your saving and investing. Many of us are so busy living life that we make excuses for not saving and investing more. The reality is so many of us are afraid of what we don’t know that we just avoid it. Sadly, we’re just too lazy to learn more so that we can get comfortable with it.

    Many of the people I talk to are clueless about investing tools, the stock market, or real estate. Real estate and the stock market are two of the primary investing tools available to us for wealth building, but very few of us take the time to learn more about them. As a result, we fail to leverage them, and that’s a perfect recipe to stay broke.

    How much should you save and invest? Well that’s really up to you. If you want to be a millionaire, which is the lowest goal you should set for yourself, you need to account for your age and create your millionaire plan. For most people, $10,000 a year is a good number to hit the millionaire goal in a respectable time, but you still need to account for you age. However, if you want to be an over achiever, keep pushing yourself to do more. Whatever the case is, get started ASAP with whatever  you can do and keep pushing yourself to grow it. Can you do $100 a month this year? Set a goal to double that next year, and then double it again the next year. If you can double that $100/month investment each year for 5 years, you’ll be investing $1,600 a month in 5 years. That’s $19,200 per year! That will add up quickly, and make you a millionaire pretty quickly.

Once you get “money smart” you’ll be better equipped to develop your own Millionaire Plan and build wealth for you and your family. If you don’t have a financial coach, you should get one soon. It’s good to have someone smart to talk with about money and building wealth.

Once you have built your wealth, life gets even more fun. You’ll be better equipped to help other people in need, and it is so rewarding. You can be a millionaire.

Great books/resources to read:
I Will Teach You to Be Rich by Ramit Sethi

Good Financial Cents website by Jeff Rose

 

 

How You Use Your Time Affects Whether or Not You Will Be Wealthy

Have you heard that time is money? As I’ve grown older and a little bit wiser, I’ve realized just how true that statement really is.

Now in my 40s, I look back over what I did with my time in my 20s and 30s. While I’ve attained a moderate level of success moving up through the executive ranks, I can see how much time I wasted, and I’m left wondering how much untapped potential I left on the table. Now heading into my 50s, I’m determined to make the best use of my time possible. Minimize the distractions. Focus on what’s really important. Focus on what creates lasting value for you, your family, your friends, and the people you want to help. The people you care about. For me, that’s about helping orphans and people trapped in poverty mindset and cultures.

Perhaps one of the best books that helped me re-prioritize my time was Robert D. Smith’s 20,000 Days and Counting. Robert does a masterful job of explaining the importance of every single day and encouraging us to make the most of each one. By looking at historical figures and seeing what they accomplished with the time they were given, Robert helps us to take an introspective look at what we’re doing with our time. Are we using it wisely?

Now, if you desire to become wealthy and you’ve set your eyes on becoming a millionaire, what you do with your time will affect whether or not you reach either one of your goals. Millionaire or Not. You Can Choose. One of those choices is what you do with your time.

As I mentioned, I wasted a lot of time in my 20s and 30s. I spent a lot of time on video games and watching movies. A lot. How much exactly? A number that I would be embarrassed to share. Fortunately, somewhere in there I found time to squeeze in some personal growth and development time, and through that time was able to reach a moderate level of success. However, I’m still left watching great people like Tony Robbins, Grant Cardone and host of others who’ve done a much better job focusing and leveraging their time. I’m left wondering what else could I have accomplished if I’d been more focused. Well, I can’t do anything about the past, but I can be more purposeful with the future.

The reality is if you want to maximize your life’s accomplishments, you need to maximize your time. Time bandits as I like to call them, rob you of your time. They keep you from reaching your peak potential.

Time Bandits.
Time bandits rob you of your most important resource. Your time. Whether or not you realize it, time bandits are stealing your future. Minimize the time bandits and you’ll maximize your future.

  • Video games
  • Reality TV
  • TV and movies
  • Overdoing sports tv
  • Social media (Facebook, Twitter, etc.)
  • What other time bandits are stealing your future potential away?

Life Multipliers.
Life multipliers help you maximize your “life output.” They boost your ability to accomplish really cool things during your lifetime, and ultimately how much you can help other people. By using your time wisely and boosting your performance with life multipliers, you’ll leave an impact in your own life, but also on the lives of those around you.

  • Reading a book (Top CEOs read 50+ books per year)
  • Listening to a growth podcast (marriage, money, parenting, career)
  • Hanging out and networking with awesome successful people
  • Picking up some side work to increase your income. Invest it.
  • Starting a small business for additional income.
  • Volunteering to help others in need
  • Learning something new

Resources to help you rethink and maximize your time for a more successful and purposeful life.

20,000 Days and Counting by Robert D. Smith (Amazon.com)

Halftime by Bob Buford (Amazon.com)

7 Habits of Highly Effective People by Steven Covey (Amazon.com)

Time Bandit vs. Life Multiplier Exercise

So try this…

  1. List out 3 Time Bandits in your life that you’re going to remove or reduce.
  2. List out 3 Life Multipliers that you are going to do now that you’ve squashed the time bandits.
  3. List out what results you hope to accomplish with this change. What will be different in your life in 12 months as a result of this change?

Always remember, your time is one of the most precious assets you have. Don’t waste it. Make every minute count no matter what you’re doing.

Millionaire or Not. You Can Choose.

Have you ever dreamed about what it would be like to be a millionaire? Well stop dreaming and start doing.

Today 8.5% of American households are millionaires. That’s up from 3.5% in 1996 according to “The Millionaire Next Door” by Thomas Stanley and William Danko. However according to bankrate.com, 76% of people are living paycheck to paycheck and many have virtually nothing in savings. Answer Two Questions: 1) Which group are you in? 2) Which group will you be in 10, 20, or 30 years from today? The millionaire group or the paycheck to paycheck group? If you can’t definitively answer “Yes” to question #2, then it’s time to make a financial change.

With the right knowledge, financial plan, hard work and discipline, you can become a millionaire. Yes. Believe it. You can be financially free. You can be wealthy.

There are two primary views of wealth in America today. 1) I will never be wealthy and 2) wealth is wrong, bad or even evil. Both of these views of wealth are wrong. While some wealthy people are not people any of us would want to be, most wealthy people work extremely hard to build their wealth, and most of them are extremely generous in sharing that wealth. After all, wealthy people can help more people in need than poor people.

In the end, it’s your choice on whether or not you become a millionaire and become wealthy. I’m just here to tell you you can do it, show you how, and inspire you along the way.

 

Retirement. Yuck. Wealth Building. Yay!

Over the years I’ve noticed that personal finance can be a very touchy subject for a lot of people. For whatever reason, I’ve just always enjoyed learning and talking about it. I’m probably way over into the realm of TMI as several of my close friends continually tell me. My filter is set pretty low.

Lately, I’ve been considering a widely used term in the personal finance world. Retirement. Yuck. Just saying it brings a bad taste to my mouth. I’m 46, and by traditional standards, I’m about 19 years away from retirement. However, I don’t like the word retirement, nor do I like the idea of waiting till I’m 65.

Retirement is a Dirty Word

To me, retirement is a dirty word. When you’re young, you don’t really care about it. When you’re old, you’re scared of it usually because you didn’t do a good job preparing for it. For example, my dad feels like he’s invincible. He’s 67 and works 50-60 hours a week. He plans to work until the day he drops. Is that realistic? No, especially since he’s been smoking since he was around 10 years old. However, he doesn’t have any other option. No retirement, and social security is a joke.

So, I prefer to dump the term “retirement”. It’s a dirty word. Instead, let’s use the words “wealth building”. Whether you are young or old, you can and should do wealth building. The more wealth building you do, the better off you’ll be when you need money. And who wants to retire in their 60s anyway. Try setting a date to quit working at 59 1/2 years old which is the earliest you can draw on your retirement without tax penalties. If you did enough wealth building earlier in your life, it’s totally doable.

I’m big on the 59 1/2 years old or sooner number because of my past life experiences. I’ve seen too many of my friends and family pass away in their 60s to wait. My mother passed away last year at age 67. My former boss passed away around 65. Every one of them would have had a good 5-10 years to enjoy more time with their family and living life however they wanted if they’d just focused more on their wealth building and broke free from the traditional “retirement mindset.”

Wealth building. 59 1/2 years old or sooner target. Do it.

Vanguard Retirement Wealth Planning Tools

Vanguard Retirement Wealth Calculator

Can $10,000 Make You a Millionaire?

Lots of people dream about becoming a millionaire and “living the dream”, but only a relative few do anything about it. Today roughly 8.5% of American households are millionaires. While that’s up significantly from the 3.5% in 1996, I personally would like it to be much much higher. That’s why I’m writing this blog. To help make more millionaires and help people enjoy more freedom in their life.

Quite a few people have a warped view of wealth. They either believe they will never have it, or they believe it is bad. Both of those views of wealth are broken. Attaining wealth is a good and worthy goal. And guess what, wealthy people can help more people than poor people can. So if you have a choice of being wealthy or not being wealthy, why not choose wealth?

Now, in talking with many of my friends, I’ve realized that quite a few are just stuck. The idea of being wealthy or being a millionaire is a bit unrealistic to them, as it was for me until I turned 26. At 26, the lights came on, and I set off to become a millionaire. Now, 20 years later after I made it, I’ve come to understand that sometimes all people need is a little prod, a little knowledge, and a plan.

Too many of us spend our income wasting it away on frivolous things. I’ve been as guilty as anyone, but fortunately, I put a ton of money back as well. I started investing at 26. $500 a month into mutual funds and dabbling in stocks like Intel, Dell, Nvidia, and others. I made some decent money for a young guy making $40,000 a year, but I should have and could have done better.

I’m a numbers nerd, so understanding how it all works comes pretty easy for me. Now I want to make it a bit easier for you. Let’s get started.

A Spending Plan (a.k.a. Budgeting)

If you want to build wealth, you have to get your spending under control. Planning your spending intimidates a lot of people. That’s why “budgeting” is such a dirty word for a lot of people.

Now you can do a complicated spending plan if you want to, but a simple one can help get you on track for building wealth. You can count the pennies and nickles later to fine tune your spending plan.

Break your money down into 4 categories.

  1. Living Money: Money that you need to support your basic lifestyle. This includes housing whether you are renting or buying a house, food, utilities, car, insurance, clothing, education, and medical.
  2. Play Money: This includes the things you do to make life enjoyable. Date nights, gym memberships, hobbies, vacations, a four wheeler, a boat, etc. Generally you could call this “the perks of life” category. You have to have some play money in your life of you’ll dry up and become miserable. However, you have to be balanced as well. Put too much money in this category and you’re wealth plans could be toast. Quite a few formerly rich people have put too much money in this category only to see all of their wealth go up in smoke. Don’t make that mistake as you are trying to build your wealth.
  3. Wealth Money: Now as you can guess, this is the most important category for someone wanting to become a millionaire. This is the category that is going to determine if you become a millionaire, and if so, how fast. The more money you can get into this category on your spending plan the better. We use this category in a couple of ways. If you’re in debt, you need to get out as quickly as possibly. Debt will rob you of your ability to build wealth. We use this category to accelerate paying off your house if you want to do that. Third, we use this category for investing. That’s what most of this post is about. Wealth Money.
  4. Other Money: This is anything that doesn’t fit cleanly in one of the other categories. It includes things like birthday gifts, church tithes if you attend a church, Christmas presents, and things like that. Generally things in this category aren’t required to do and the amounts may vary quite a bit. You have wiggle room to adjust things a lot in this category as long as you don’t leave off your mom or spouse’s birthday.

Now I’m not going to cover the spending plan in today’s post. I’m going to only focus on the wealth money part of your spending plan. If you want to be wealthy, you have to put as much money into this part of your spending plan as fast as you can. Wealth can be built really fast if you’re a .com startup like facebook, or it can be built over time. The most common way to build wealth is over time through good financial decisions and investments.

Wealth Money

Wealth Money. So many people miss building wealth because they are busy spending their money on lattes, cable and new cars when they could be building wealth. I like to keep things simple…well, that’s exactly not true. I like complicated things, but sometimes things can be simple. We just over complicate them. Building wealth doesn’t have to be complicated. In fact, it really isn’t complicated. What do I mean?

Take $10,000 for example. It’s a simple number. It intimidates a lot of people. Have you ever held $10,000 cash in your hand? Try it. It’s pretty cool. Once you hold it, $10,000 doesn’t seem like a big number anymore.

Now, if you take $10,000 as your base investment number, what happens is pretty interesting.

  • $10,000 over 20 years becomes $67,275
  • $10,000 over 30 years turns into $175,000
  • $10,000 over 40 years turns into $452,000
  • $10,000 over 50 years turns into $1,173,000
  • $10,000 over 60 years turns into $3,044,000
  • $10,000 over 70 years turns into $7,897,000

These numbers are all based on a 10% rate of return which is an acceptable and available rate of return in the mutual fund and stock market. With the right investment, you can beat 10% and build even more wealth. I like using the 10% number because its simple to calculate, understand and readily available. Let’s go with it.

Now, you may be saying “Where do I get $10,000?” or “Are you kidding? I’m 45. No way I’m going to be wealthy. You just proved it to me.” Scrap those thoughts. Wealthy people all have one thing in common. When they run into problems, they figure out a way to deal with them. So what if you don’t have $10,000 right now, figure out how to get it. So what if your 45, find a way to increase your income and make up for lost time. Heck. Colonel Sanders started KFC in his 60s. Most people are retiring in their 60s. He was just getting started! $10,000 isn’t that much money when you break it down. $10,000 spread out over 1 year is $833.33 a month. Now how can you find $833.33 a month? There are tons of ways. At $10 an hour, it’s only 80 more hours of work a month. 20 hours a week. Or if you work at Costco and make $15 per hour, it’s 56 hours. Find a way. Don’t stop looking until you find a way.

As part of your spending plan, put as much money as you can into that wealth money category. In fact, scale everything back that you can until you hit a really good wealthy money number. If you can’t get to $10,000 year, start with what you can, then work towards $10,000 year as fast as you can. Once you hit $10,000, see if you can multiply it. Can you get to $20,000? Always up your goal. The more wealth money you can sock away, the faster it will grow. The bigger it will grow. Your first stop on this journey is the millionaire milestone. Once you do that, you’ll dream even bigger. You can do it.

Now, your homework. Play with your own wealth money numbers. Take that $10,000 and multiply it. What if you did that every year for 30 years? Well, I’ve already done the work for you and I’m including it in this post. Dream big! The more wealth you create the more good things you can do in this world, and guess what, it’s a lot more fun too when you have some wealth. I love traveling and I’ve got a long bucket list of places I want to go.

20, 30, 40 Year $10,000 Investments @ 10% Charts PDF

20, 30, 40 Year $10,000 Investments @ 10% Excel Spreadsheet

You can play with your own investment planning with this investing calculator at Bankrate.com or this more colorful and simple investing calculator at SmartAsset.com .

You’ve Got Your $10,000 Investment Money

Congratulations. You’ve figured out how to get your hands on $10,000 to invest. Now what do you do with it? You invest it. Where you say? Great question.

You can invest in a multiple of ways, but if its your first $10,000, you should probably play it a little bit safer. Stay away from single stocks. Mutual Funds are a better investment for you. Your first investments should go into your 401k or a Roth investment usually through your workplace. Even inside of those investment tools, you want to make sure you pick the right investments. Again, you’re looking for investing returns of 10% or higher for over 10 years.

Outside of your workplace, you can invest through an financial advisor or you can go direct to some of the best mutual providers like Janus, Fidelity, Oppenheimer or Vanguard. They have research tools that help you select funds. Again, you want funds that return 10% or more over the long haul. That’s averaging 10% growth per year over 10 years or longer. You can also use Morningstar.com to help you with your research.

Find a solid growth stock mutual fund at 10% or more and there you go. You’re off to the races. Oh, and one more thing. Don’t freak out if the stock market and your mutual fund drops. You leave your money in. The people that freak out and pull their money out, lose. Only take money out at retirement (59 1/2 years old) and preferably only when the market is up.